Crescent Energy CoCRGY
Crescent Energy Co Stock Compensation Disclosure
Equity-Based Compensation Awards
Overview
We and certain of our subsidiaries have entered into incentive compensation award agreements to grant profits interest awards, restricted stock units ("RSUs"), performance stock units ("PSUs") and other incentive awards to our employees, our Manager, and non-employee directors. The following table summarizes compensation cost we recognized in connection with our equity-based compensation awards for the years indicated:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
Equity-based compensation expense: | |||||||||||||||||
Liability-classified profits interest awards | $ | 83 | $ | 3,446 | $ | 298 | |||||||||||
Equity-classified profits interest awards | 781 | (11,649) | 12,799 | ||||||||||||||
Equity-classified LTIP RSU awards | 4,520 | 2,999 | 1,685 | ||||||||||||||
Equity-classified LTIP PSU awards | 683 | 639 | 118 | ||||||||||||||
Equity-classified Manager PSUs | 229,828 | 188,138 | 68,036 | ||||||||||||||
SilverBow Merger awards | — | 9,908 | — | ||||||||||||||
| Vital Energy Merger awards | 13,181 | — | — | ||||||||||||||
Total equity-based compensation expense | $ | 249,076 | $ | 193,481 | $ | 82,936 | |||||||||||
| Tax benefit related to equity-based compensation awards | $ | 675 | $ | 851 | $ | 277 | |||||||||||
Our incentive compensation awards may contain certain service-based, performance-based, and market-based vesting conditions, which are further discussed below.
Equity-based compensation awards
Liability-classified profits interest awards
We issue profits interests that are liability-classified stock-based compensation awards. These awards contain different vesting conditions ranging from performance-based conditions that vest upon the achievement of certain return thresholds to time-based service requirements ranging from one year to four years. Each of these profits interests is liability-classified because of certain features within these awards that predominantly contain characteristics of liability instruments. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to other long-term liabilities on the consolidated balance sheets.
We did not have any unrecognized compensation cost related to time-based unvested liability-classified profits interest awards at December 31, 2025 and 2024. We had no unrecognized compensation cost related to performance-based unvested liability classified profits interest awards as of December 31, 2025, and $2.9 million as of December 31, 2024. As of December 31, 2025 and 2024, we carried $2.4 million and $4.5 million in Other liabilities on the consolidated balance sheets, respectively. Transactions involving all of our unvested liability-classified stock-based compensation profits interests awards is summarized below:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (units in thousands) | |||||||||||||||||
| Beginning balance | 1 | 1 | 1 | ||||||||||||||
| Granted | — | 371 | — | ||||||||||||||
| Vested | (1) | (371) | — | ||||||||||||||
| Forfeited | — | — | — | ||||||||||||||
| Ending balance | — | 1 | 1 | ||||||||||||||
| (in millions) | |||||||||||||||||
| Fair value of vested awards | $ | 1.5 | $ | 7.3 | $ | — | |||||||||||
| Cash settlements of liability-classified profits interest awards | 1.5 | 7.3 | — | ||||||||||||||
Equity-classified profits interest awards
We issue equity-classified profits interests awards that contain different vesting conditions ranging from performance-based conditions that vest upon the achievement of certain return thresholds to time-based service requirements ranging from one year to four years. Each of these profits interests is equity-classified because of certain features within these awards that predominantly contain characteristics of equity instruments. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital on the consolidated balance sheets.
We had no unrecognized compensation cost related to time-based unvested equity-classified profits interest awards as of December 31, 2025. Unrecognized compensation cost related to time-based unvested equity-classified profits interest awards was $0.8 million as of December 31, 2024. Unrecognized compensation cost related to our performance based equity-classified profits interest awards was $1.5 million for the years ended December 31, 2025 and 2024, respectively. Transactions involving all of our unvested equity-classified profits interest awards, including weighted average grant date fair values, are summarized below:
| Units | Weighted average grant date fair value | ||||||||||
| (in thousands) | |||||||||||
| Unvested at December 31, 2023 | 106,589 | $ | 0.86 | ||||||||
| Vested | (43,905) | 0.14 | |||||||||
| Forfeited | (2,784) | 29.23 | |||||||||
Unvested at December 31, 2024 | 59,900 | $ | 0.07 | ||||||||
| Vested | (30,035) | 0.08 | |||||||||
Unvested at December 31, 2025 | 29,865 | $ | 0.05 | ||||||||
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Fair value of awards vested during the period | $ | 2,306 | $ | 6,361 | $ | — | |||||||||||
Equity-classified LTIP RSU Awards
During the years ended December 31, 2025 and 2024, we granted equity-classified LTIP RSUs under the Crescent Energy Company 2021 Equity Incentive Plan (“LTIP”) to certain directors, officers and employees. Each LTIP RSU represents the contingent right to receive one share of Class A Common Stock. LTIP RSUs will vest over a period of to three years, with equity based compensation expense recognized ratably over the applicable vesting period. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital and Redeemable noncontrolling interest on the consolidated balance sheets.
At December 31, 2025 and 2024, we had $8.3 million and $2.4 million of unrecognized compensation cost related to unvested equity-classified LTIP RSU awards, which are expected to be recognized over a remaining weighted average period of 2.0 years and 2.1 years, respectively. The fair value of vested LTIP RSUs during the years ended December 31, 2025 and 2024 was $3.4 million and $1.4 million respectively. Transactions involving all of our unvested equity-classified LTIP RSU awards, including weighted average grant date fair values, are summarized below:
Restricted Stock Units | Weighted average grant date fair value | ||||||||||
| (in thousands) | |||||||||||
| Unvested at December 31, 2023 | 287 | $ | 12.77 | ||||||||
| Granted | 301 | 11.45 | |||||||||
| Vested | (116) | 11.99 | |||||||||
| Forfeited | (26) | 17.42 | |||||||||
Unvested at December 31, 2024 | 446 | $ | 11.82 | ||||||||
| Granted | 1,110 | 11.06 | |||||||||
| Vested | (283) | 11.89 | |||||||||
| Forfeited | (146) | 11.20 | |||||||||
Unvested at December 31, 2025 | 1,127 | $ | 11.14 | ||||||||
Equity-classified LTIP PSU Awards
During the years ended December 31, 2025 and 2024, we granted equity-classified LTIP PSUs under the Crescent Energy Company 2021 Equity Incentive Plan to certain employees. Each LTIP PSU represents the right to receive one share of Class A Common Stock, on such LTIP PSU's performance period end date, modified by an amount ranging from 0% to 240% based on certain absolute and relative shareholder return components. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital and Redeemable noncontrolling interest on the consolidated balance sheets.
At December 31, 2025 and 2024, we had $3.5 million and $1.6 million of unrecognized compensation cost related to unvested equity-classified LTIP PSU Awards, which are expected to be recognized over a remaining weighted average period of 2.3 years and 2.4 years. The fair value of vested LTIP PSUs during the year ended December 31, 2025 is $0.2 million. We did not have any LTIP PSUs vest during the year ended December 31, 2024. Transactions involving all of our unvested equity-classified LTIP PSU awards, including weighted average grant date fair value, are summarized below:
| Target Class A Shares | Weighted average grant date fair value | ||||||||||
| (in thousands) | |||||||||||
| Unvested at December 31, 2023 | 102 | $ | 22.75 | ||||||||
| Unvested at December 31, 2024 | 102 | $ | 22.75 | ||||||||
| Granted | 191 | 22.75 | |||||||||
| Vested | (9) | 22.75 | |||||||||
| Forfeited | (63) | 22.75 | |||||||||
| Unvested at December 31, 2025 | 221 | $ | 22.75 | ||||||||
Equity-classified Manager PSU Awards
We have equity-classified Manager PSUs that were granted in accordance with the Manager Incentive Plan. The Manager PSU performance periods are generally three years with the performance period end dates ranging from December 2024 through December 2028. Each Manager PSU represents the right to receive a target 2% of our issued and outstanding Class A Common Stock on such Manager PSU's performance period end date, modified by an amount ranging from 0% to 240% based on certain absolute and relative shareholder return components. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital on the consolidated balance sheets.
During the year ended December 31, 2025, in conjunction with the 2025 Equity Transactions, the Vital Energy Merger, the Ridgemar Acquisition, repurchases of Class A common stock and LTIP RSU award vesting, we increased our Class A Common Stock share count by 140.8 million shares. As a result, the number of equity-classified Manager PSU target shares of Class A Common Stock related to the Crescent Energy Company 2021 Manager Incentive Plan increased by approximately 9.8 million shares. We accounted for this increase as a change in estimate and recognized additional expense of $146.5 million during the year ended December 31, 2025. See NOTE 3 – Acquisitions and Divestitures for more information.
During the year ended December 31, 2024, in conjunction with the 2024 Equity Transactions, the closing of the SilverBow Merger, 2024 Class A Repurchases and LTIP RSU award vesting, we increased our Class A Common Stock share count by 95.5 million shares. As a result, the number of equity-classified Manager PSU target shares of Class A Common Stock related to the Crescent Energy Company 2021 Manager Incentive Plan increased by approximately 9.5 million shares. We accounted for this increase as a change in estimate and recognized additional expense of $121.8 million during the year ended December 31, 2024. See NOTE 3 – Acquisitions and Divestitures for more information. The certification of the Company's level of achievement with respect to the first and second Target PSU for the three-year-performance periods under the Incentive Compensation is in process and is expected to be completed in 2026.
Unrecognized compensation cost related to unvested awards was $140.1 million and $144.0 million, at a weighted average grant date fair value of $22.75 per share as of December 31, 2025 and 2024, and is expected to be recognized over a remaining weighted-average period of 1.9 years and 2.4 years, respectively. Transactions involving all of our unvested Manager PSUs are summarized below:
| Target Class A Shares | |||||
| (in thousands) | |||||
| Unvested at December 31, 2023 | 9,160 | ||||
| Granted | 9,546 | ||||
| Vested | (3,741) | ||||
Unvested at December 31, 2024 | 14,965 | ||||
| Granted | 9,801 | ||||
| Vested | (5,092) | ||||
Unvested at December 31, 2025 | 19,674 | ||||
Vital Energy Merger Awards
On December 15, 2025, in accordance with the Vital Energy Merger Agreement, certain of the outstanding Vital equity awards were modified to vest immediately and certain of the outstanding Vital equity awards were modified to vest at the maximum level of performance. Accordingly, we recognized a portion of this settlement as consideration transferred in the Vital Energy Merger and the remaining settlement was recognized as a one-time charge to equity based compensation expense within General and administrative expense on the consolidated statements of operations during the year ended December 31, 2025. See NOTE 3 – Acquisitions and Divestitures for more information.
SilverBow Merger Awards
On July 30, 2024, in accordance with the Agreement and Plan of Merger, certain of the outstanding SilverBow Equity Awards were modified to be accelerated to vest immediately and certain of the outstanding SilverBow Equity Awards were modified to vest at the maximum level of performance. Accordingly, we recognized a portion of this settlement as consideration transferred in the SilverBow Merger and the remaining settlement was recognized as a one-time charge to equity based compensation expense within General and administrative expense on the consolidated statements of operations during the year ended December 31, 2024. See NOTE 3 – Acquisitions and Divestitures for more information.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.